Company OverviewEmerson Electric Company was founded in 1890 as a manufacturer of motors and fans. Today, Emerson is a major domestic electrical manufacturer. It manufactures a broad range of electrical, electromechanical, and electronic products for industry and consumers. In 1993, Emerson reported $708 million profit, which marked the 36th consecutive year of improved earnings per share. In addition, Emerson had $2 billion in unconsolidated sales in international joint ventures. International sales have grown to forty-percent of total sales and present a promising growth area for the company. Organizational Structure

Emerson was organized into forty decentralized divisions consisting of separate product lines with the goal to be number one or two in the market for each product line. After 1990, Emerson reorganized its forty divisions into the following eight business segments: 1. Fractional Horsepower Motors

This new structure exploits common distribution channels, organizational capabilities, and technologies. To encourage open communication and interaction among all levels of employees, Emerson does not publish an official organizational chart but we have created a chart that might closely represent the structure at Emerson, which can be found in Appendix A. Corporate staff in 1993 consisted of 311 people; the same number as in 1975, when the company was one-sixth its current size in term of sales. Staffs are kept to a minimum because top management believes a large staff will create more work for the divisions. We have depicted this difference in Appendix B.

Strategy and Strategic Objectives
Corporate-Level StrategyEmerson Electric up until the early 1980’s focused on being a low-cost producer within its industry, however due to a lack of competitiveness globally across its product lines the company required a new strategic direction. Emerson Electric transitioned to a Best Cost Producer Strategy in order to compete well in both the domestic and international marketplaces. This new strategy not only focused on cost-reduction through the planning process but also in continuous quality improvements of the products. There are six elements vital to this strategy: 1. Commitment to total quality and customer satisfaction

2. Knowledge of the competition and the basis on which they compete 3. Focused manufacturing strategy, competing on process as well as product design 4. Effective employee communications and involvement

5. Formalized cost-reduction programs, in good times and bad 6. Commitment to support the strategy through capital expenditures

Emerson is a related diversified producer of products related to electrical manufacturing, either electromechanical or electronic. Emerson’s growth strategy is through acquisitions (primarily foreign) and international joint ventures, in combination with strategic periodic divestitures, to find the appropriate or complementary mix of products. All corporate-level strategies work towards the common goal of stockholder wealth maximization. Business Unit Level Strategy

Based on the Boston Consulting Group (BCG) matrix, see Appendix C, Emerson Electric’s...

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...area with 40% of total sales.
* Divisions are organized into eight segments.
External Analysis: 5 forces
* New Entrants: Low because there are only a few key successful players in the industry.
* Rivals: High because competition among key players is fierce; all big brand names.
* Threat of Substitutes: Medium/Low because there are substitutes but they are of lower quality and do not have the brand recognition.
Company Strategies
Corporate Strategy
* Related Diversified: EmersonElectric Co produces a broad range of electric, electromechanical, and electric products for industry and consumers
* Diversified St. Louis company.
* Related through core competencies:
* The eight segments share distribution channels, organizational capabilities, as well as technologies.
* Corporate staff is small; top management believes a large corporate staff will create more work for the divisions.
Business Strategy
* Build: international joint ventures are a growth area with 40% of sales.
* Emerson follows a growth through acquisition strategy but no one acquisition has been very large.
* CEO believes in constant improvements in order to achieve growth and strong financial results.
* Increased investments to 1.8 billion.
* Growth rates are set above economic expectations.
*
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Case Study
January 17th, 2008
EXECUTIVE SUMMARY
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...CASE TWO:
Westport Electric Corporation
Case Context
In a meeting, James King, the supervisor of administrative staff budget section of Westport ElectricCompany, a large manufacturer and seller of electric and electronic products, was discussing his displeasure with the proposed increase in budget of the offices. According to him, these are not justified and are clear indications of faults in the company’s budgeting system. The company currently has six staff offices like those mentioned and they are tasked with providing advice to top management and operating divisions as well as other staff offices. They also coordinated among the divisions depending on their areas of activity. These staff offices are budgeted using the company’s budget approval procedure, which according to some of its officers like King, needs a lot of improvement.
PROBLEM STATEMENT
The budgeting system of Westport should be assessed as to its efficiency and effectiveness and identify changes that will develop the current system.
ANALYSIS AND RECOMMENDATION
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